An updated edition of the Feb 13, 2026 article.

Once a key defense application, unmanned aerial vehicles (UAVs) or drones are now gaining rapid mainstream adoption. Drones are reshaping how governments, businesses and consumers approach border defense, surveillance, logistics and infrastructure monitoring.

Further, advancements in artificial intelligence (“AI”) and cloud and edge computing are pushing the drone industry into a new growth phase. The embedding of AI has made modern drones faster and more versatile than ever. AI incorporation is driving the autonomous navigation functionality of drones, enabling them to autonomously plan their flight paths based on real-time data, such as environmental terrain. The integration of 5G and advanced Wi-Fi technology has improved real-time data transmission, expanding commercial applications.

Defense spending continues to be a major tailwind. Within the defense vertical, growing geopolitical strains and defense upgrades are driving increased drone adoption worldwide. Globally, drones are now being widely deployed for border security, precision strikes, intelligence, surveillance, and reconnaissance (“ISR”) and other tactical operations, making them indispensable assets in modern warfare.

With regulatory frameworks evolving and military and commercial adoption gaining pace, the drone sector has a long runway for growth. From last-mile delivery pilots to precision agriculture and energy grid monitoring, drones are becoming mission-critical assets. Companies are leveraging drones to cut costs, improve efficiency and gather real-time data at scale.

The UAV drones market is expected to witness a CAGR of 16.77% from 2026 to 2035, according to a report from Precedence Research.

Moreover, the shift toward the “drone-as-a-service” model is opening recurring revenue streams through software subscriptions and maintenance services, thereby improving the visibility for drone tech companies.

If you are looking to capitalize on this trend, our Drone Technology Screen makes it easy to identify high-potential stocks, such as Unusual Machines (UMAC Quick QuoteUMAC - Free Report) , Draganfly Inc. (DPRO Quick QuoteDPRO - Free Report) and Kratos Defense & Security Solutions (KTOS Quick QuoteKTOS - Free Report) .   

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3 Drone Tech Stocks in Focus

Unusual Machines is a fast-scaling player within the evolving drone industry supported by strong tailwinds. The company is a domestic NDAA-compliant drone components supplier. The first-person view or FPV segment is UMAC’s core operational area within the drone industry.

Fourth-quarter 2025 revenues of $4.9 million rose 133% sequentially, while full-year revenues were $11.2 million, up 101% year over year. The improvement has been driven by the company’s transition to becoming a drone components producer and expanding its enterprise sales business from a mere online retail presence. The enterprise segment now comprises 81% of revenues compared with just 31% in the first quarter of 2025. Gross margin expanded to 36% in the fourth quarter from 24% in the first quarter of 2025.

UMAC is also benefiting from a favorable demand environment, with management highlighting that the drone market is currently supply-constrained, with demand expected to exceed supply through 2027. The company further added that the U.S. government’s Drone Dominance program alone could represent a $90 million component opportunity in 2026 and $250 million in 2027.

A strengthened balance sheet is another tailwind. The company ended 2025 with $103 million in cash and no debt. This was supported by nearly $157 million in capital raised during the year. The financial flexibility offers ample scope to expand organically and through M&A.

UMAC carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Draganfly is a Canada-based drone solutions and systems developer. The company’s drones include the Commander 3XL, Heavy Lift Drone, Commander 2 and Draganfly Medical Response Drone. The company’s Apex drone is aimed at ISR, marketed for both the military and public safety. Apex drone boasts dual payload capabilities and AI computing, powered by NVIDIA’s chips. Further, DPRO’s NDAA-compliant FlexForce FPV drone can be flown individually or autonomously, or swarmed.

DPRO has 5-plus drone systems that are all NDAA-compliant. As the United States and NATO aggressively eliminate non-compliant Chinese systems from critical infrastructure, this compliance advantage becomes a moat. In October 2025, the company introduced its Outrider Southern Border drone, which is a North American-built, NDAA-compliant multi-mission drone platform. 

On the last earnings call, management noted a “10-year super cycle” around drones, driven by simmering geopolitical tensions and rapid adoption of autonomous systems. Demand is accelerating across North America and Asia-Pacific, particularly from the Middle East, due to escalating regional conflicts.

Increasing deals with the U.S. military bode well. One of the most significant developments in 2025 was the company’s first major U.S. Army FPV drone order, which is not only a product sale but also includes providing supply chain and logistical support. It also includes onsite assembly and manufacturing training for the Army to allow them to make “modifications on the fly.” 

DPRO, a Zacks Rank #3 stock at present, is expanding its footprint in the demining vertical with collaborations with Autonome Labs and SafeLane. With its data, expertise and AI-powered aerial mapping capabilities, DPRO is well-positioned to expand in this niche market. The company achieved 17.8% revenue growth in 2025, supported by rising product sales.

Kratos boasts a diverse range of tactical UAVs, including the UTAP-22 Mako, XQ-58A Valkyrie, and X-61A Gremlin, as well as aerial target drones such as the BQM-167A, BQM-177A, and MQM-178 Firejet.

The broader demand backdrop strongly supports sustained growth in Kratos’ drone business. At the heart of this business lies the XQ-58A Valkyrie combat collaborative aircraft (CCA), which has secured a key role in the U.S. defense ecosystem. Northrop Grumman, a KTOS partner, received the $230 million MUX TACAIR CCA program award, which will be split equally with Kratos. For this program, Northrop will equip its mission systems with Kratos Valkyrie CCA, validating Valkyrie’s operational relevance. 

KTOS is scaling its Valkyrie production capacity, aiming to produce 40 aircraft per year by 2028, up from 8 at present. Management further added that future production quantities and delivery schedules with clients are expected to be “definitized” by late 2026 or early 2027, likely tied to 2027 federal U.S. defense appropriations approvals. 

Programs such as the Drone Dominance initiative (part of a $1 billion DoW effort) and international efforts like the Mighty Hornet Tactical Firejet CCA program in Taiwan, which targets high-volume deployment, further expand Kratos’ pipeline and reinforce its positioning in both domestic and allied markets.

KTOS, which carries a Zacks Rank #3, recently secured a $7 million counter-UAS systems order. Beyond drones, Kratos is also expanding into other high-growth areas, including space and satellite software, hypersonics and microwave electronics, diversifying its revenue streams.